Fidus Investment (NYSE: TCAP) and Triangle Capital (NYSE:TCAP) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, analyst recommendations, dividends and profitability.

Earnings & Valuation

This table compares Fidus Investment and Triangle Capital’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fidus Investment $68.61 million 5.27 $43.95 million $1.43 10.34
Triangle Capital $123.00 million 4.61 -$28.65 million $1.55 7.61

Fidus Investment has higher earnings, but lower revenue than Triangle Capital. Triangle Capital is trading at a lower price-to-earnings ratio than Fidus Investment, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Fidus Investment has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500. Comparatively, Triangle Capital has a beta of 0.75, indicating that its share price is 25% less volatile than the S&P 500.

Institutional and Insider Ownership

27.7% of Fidus Investment shares are held by institutional investors. Comparatively, 50.1% of Triangle Capital shares are held by institutional investors. 1.3% of Fidus Investment shares are held by company insiders. Comparatively, 3.5% of Triangle Capital shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Fidus Investment and Triangle Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fidus Investment 65.95% 8.73% 5.28%
Triangle Capital -17.98% 10.25% 5.54%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Fidus Investment and Triangle Capital, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fidus Investment 0 1 1 0 2.50
Triangle Capital 3 4 2 0 1.89

Fidus Investment currently has a consensus target price of $16.00, indicating a potential upside of 8.25%. Triangle Capital has a consensus target price of $12.88, indicating a potential upside of 9.11%. Given Triangle Capital’s higher possible upside, analysts clearly believe Triangle Capital is more favorable than Fidus Investment.

Dividends

Fidus Investment pays an annual dividend of $1.56 per share and has a dividend yield of 10.6%. Triangle Capital pays an annual dividend of $1.20 per share and has a dividend yield of 10.2%. Fidus Investment pays out 109.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Triangle Capital pays out 77.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fidus Investment has raised its dividend for 3 consecutive years. Fidus Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Triangle Capital beats Fidus Investment on 9 of the 17 factors compared between the two stocks.

About Fidus Investment

Fidus Investment Corporation is a business development company specializing in leveraged buyouts, refinancings, change of ownership transactions, recapitalizations, strategic acquisitions, mezzanine, growth capital, business expansion, lower middle market investments, debt investments, subordinated and second lien loans, senior secured and unitranche debt, preferred equity, warrants, subordinated debt, senior subordinated notes, junior secured loans, and unitranche loans. It does not invest in turnarounds or distressed situations. The fund prefers to invest in aerospace and defense, business services, consumer products and services including retail, food, and beverage, healthcare products and services, industrial products and services, information technology services, niche manufacturing, transportation and logistics, and value-added distribution sectors. It seeks to invest in companies based in United States. The fund typically invests between $5 million and $15 million per transaction in companies with annual revenues between $10 million and $150 million and an annual EBITDA between $3 million and $20 million, but it can occasionally invest in larger or smaller companies. It seeks to acquire minority equity stakes and board observation rights in conjunction with its investments.

About Triangle Capital

Triangle Capital Corporation is a business development company specializing in private equity and mezzanine investments. It focuses on leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. The firm prefers to make investments in many business sectors including manufacturing, distribution, transportation, energy, communications, health services, restaurants, media, and others. It primarily invests in companies located throughout the United States, with an emphasis on the Southeast and Midatlantic. The firm makes equity investments between $1 million and $25 million and debt investments between $5 million and $30 million per transaction, in companies having annual revenues between $20 million and $200 million and EBITDA between $3 million and $35 million and can also co-invest. It typically makes investments between $5 million and $35 million. It primarily invests in senior subordinated debt securities secured by second lien security interests in portfolio company assets, coupled with equity interests. The firm also invests in senior debt securities secured by first lien security interests in portfolio companies. Triangle Capital Corporation was incorporated on October 10, 2006 and is based in Raleigh, North Carolina.

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